Bonus abuse: iGaming’s hidden margin killer

Bonus abuse has grown exponentially over the years. It is silent, but deadly and North American operators are aware of the impact. Account takeovers, stolen identities, affiliate & payment fraud, multi-accounting: none of this causes as much destruction as bonus abuse.

The latest LexisNexis Risk Solutions report makes this point uncomfortably clear. Bonus abuse has moved to the top of the risk agenda. The study found 78 per cent of North American operators list bonus abuse among the fraud and compliance risks impacting them the most. The biggest fraud threat in the market right now is not the one that looks the most illegal. It’s the one that seemingly indicates growth.

Why bonus abuse hides so well

Potential bonus abusers who want to exploit promotional offers don’t always look like bad actors. They might resemble a new player, they might deposit or trigger welcome offers, free bets, matched bonuses or other incentives. They might even seem, for a short time, to contribute to Gross Gaming Revenue (GGR).

On the surface, the numbers look healthy and the revenue seems to be rising. Acceptable customer acquisition costs, reasonable early lifetime value, active engagement, clean registration data, and normal bonus participation.

Then, the margin disappears. Bonus abuse exploits the same mechanics operators use to compete. Promotions are built to boost acquisition and improve retention, and fraudsters understand this. Instead of breaking the system, they use it for its intended purposes, but to their advantage. This is why prevention needs to move earlier in the journey. EveryMatrix’s Bonus Guardian was built with that principle in mind: reducing exposure to bonus abuse while keeping the experience smooth for genuine players.

The LexisNexis report describes a familiar cycle: a fraudster bypasses sign-up checks using fake details, stolen credentials or synthetic identities; deposits and receives a bonus; meets ‘play through’ requirements while protecting their own funds; withdraws; then repeats. This wouldn’t cause as much damage if it was done manually, but bonus abusers have learned to do this systematically, and at scale.
Conventional, manual anti-fraud methods can no longer keep up.

LexisNexis Risk Solutions reports detecting bonus abuse networks responsible for fraud exposure as large as $3.2m, and in one instance linked more than 95,000 fraud events to a single case of bonus abuse.

According to the study, more than half of operators say bonus abuse accounts for 11-25 per cent of total fraud losses. Another 12 per cent say it represents more than a quarter of all fraud losses.

The pressure points: account creation and withdrawal

Fraud is not evenly distributed across the player journey. Around 60 per cent of fraud losses occur at two distinct points: account creation and withdrawal. This pattern is not limited to North America. It reflects a global trend.

Targeting the beginning and the end of the player journey creates a difficult operating challenge. Add too much friction at the onboarding stage and genuine players abandon registration. Add too much friction at the point of withdrawal and loyal players lose trust. Add too few friction points and fraudsters have a free pass.

Fortunately, operators understand this. 81 per cent of study respondents say even moderate friction can cause users to abandon registration, while 72 per cent say platform abandonment happens at both onboarding and withdrawal. This makes fraud prevention more than a security issue. It makes it a conversion, retention, and customer experience issue.

Manual monitoring no longer cuts it

Many operators still rely on outdated prevention tools, with 63 per cent of North American brands using manual monitoring as part of their fraud defenses. Manual review, while still having its place, can’t keep up with the speed, coordination, and sheer volume of modern bonus abuse networks. The detection gap is clearest in two areas operators themselves rank as major concerns: multi-accounting and identity fraud.

Instead of more friction, operators want:

• Earlier, more reliable detection
• To eliminate risk before bonuses are exploited and losses appear
• Stronger identity verification without punishing legitimate players
• Real-time device, behaviour, transaction, and account intelligence.

From damage control to prevention

Bonus abuse detection must happen before promotional value is released. AI and machine learning have a practical role here: identifying behaviours, detecting repeated abuse patterns, and flagging high-risk activity faster than manual workflows can.

EveryMatrix’s Bonus Guardian is built precisely around that need, using AI and machine learning to help global operators prevent bonus abuse efficiently, reduce manual workload and protect promotional spend without adding unnecessary friction and possibly losing genuine players.

Bonus Guardian doesn’t just help operators block more users. It helps them distinguish between:

• a valuable new player and a fraud account;
• legitimate bonus engagement and coordinated abuse;
• necessary verification and conversion-killing friction.

Bonus abuse is no longer a side issue. It hides between growth numbers and distorts growth signals. This is why the response cannot be slower reviews, heavier checks, or more friction across the board. It has to be earlier intelligence and more precise intervention.

North American operators are right to treat fraud management as a customer experience problem, not just a security one. Protecting the player journey and the business model are now the same challenge.
The operators who deal with this type of fraud first will not simply lose less. They will understand their players, promotions, and margins more clearly than their competition.

The original version of this article was published by G3 Newswire.